Lemonade (LMND) Financials

Lemonade, Inc. (NYSE: LMND) has reported its Q1 2025 financial results along with historical data from the last four years, showing trends in revenue, expenses, net income, cash flows, and balance sheet strength.

Key Positive Items:

• Steady revenue growth: Premiums earned increased from approximately $50.6 million in Q3 2022 to $104.3 million in Q1 2025, more than doubling over this period.
• Increasing non-interest income: Total non-interest income rose steadily to $151.2 million in Q1 2025 from $74.0 million in Q3 2022, driven by higher trust fees, service charges, and realized/unrealized capital gains.
• Consistent investment activities: The company has generated substantial inflows from sale/maturity of investments across quarters, for example, $39.6 million in Q1 2025 and $104.8 million in Q3 2023.
• Growing cash and equivalents: Cash and due from banks increased to $319.7 million in Q1 2025 from $225.0 million in Q3 2022, indicating improving liquidity.
• Marketing expense increases accompanied by revenue growth, suggesting ongoing investment in customer acquisition and expansion.

Neutral Items:

• No interest income or expense reported indicating Lemonade’s business model likely does not involve traditional interest-generating assets or debt-expense.
• Provision for loan losses fluctuates modestly but does not constitute a major impact given overall business focus appears insurance-related.
• Long-term assets include goodwill and intangible assets relatively stable around $19 million and $11-30 million respectively over time, reflecting acquisition or development investments.
• Total shares outstanding have increased gradually, from roughly 66.9 million basic shares in Q3 2022 to 72.9 million in Q1 2025, reflecting some equity issuance or dilution.
• Significant capital expenditures on property and equipment typically around $2-3 million quarterly, consistent with infrastructure investment.

Key Negative Items:

• Consistent net losses: Net losses have persisted every quarter with Q1 2025 reporting a consolidated net loss of $62.4 million, worsening from prior quarters (e.g., -$42.4 million in Q4 2023).
• Total non-interest expenses have increased sharply from $163 million in Q3 2022 to $213 million in Q1 2025, driven by rising marketing expenses, insurance claims, and operating expenses.
• Operating cash flow remains negative in most recent periods, with Q1 2025 showing a cash outflow of $47.2 million, indicating cash burn from operations.
• Significant increase in claims and claim expenses from $53.3 million in Q3 2022 to $85.4 million in Q1 2025, pressuring profitability.
• Retained earnings remain deeply negative at -$1.36 billion in Q1 2025, reflecting cumulative losses and impacting equity value.

Summary: Lemonade shows strong top-line growth in premiums and other income streams, reflecting growth and expanding operations. However, this has come with increasing expenses, large claims, and consistent quarterly losses. There are ongoing negative cash flows from operations, though investing activities show active portfolio management and financing activities provide liquidity support. Share dilution and negative retained earnings highlight equity erosion due to losses.

Investors should weigh Lemonade’s rapid revenue expansion and market positioning against its ongoing profitability challenges and cash burn trends over the last four years.